In a period when more Americans are seeking an edge in managing household costs and borrowing rates are declining, personal loan originations are rising across the United States and should continue to do so throughout 2026.
According to data from the credit assessment firm TransUnion, unsecured personal loans (a loan that does not require the borrower to put up any property as collateral) were at a record level of 7.2 million in the third quarter of 2025, with overall loan balances growing to $276 billion in the fourth quarter of 2025.
Why the sudden growth in personal loans? Lower interest rates, thanks to Federal Reserve rate cuts, certainly helped. Yet credit experts say there’s more to the story.
“As interest rates have dropped slightly, more borrowers are using fixed-rate loans to pay off high-interest credit cards and get steady payments,” Loretta Kilday, an analyst at Debt Consolidation Care, told NTD News. “At the same time, more people with lower credit scores are relying on unsecured loans to cover daily expenses, which has pushed loan balances to new highs.”
Here's How to Land a Good Personal Loan Deal Right Now
With household debt expanding in early 2026, a personal loan with a moderate interest rate can play a big role in curbing that debt. Loan experts advise taking these tips to the loan table to secure the best possible deal.
Treat shopping for a personal loan like you would a mortgage
Get three to five prequalified offers using soft credit checks, then compare the APR, fees, and loan terms.
“Then choose the shortest term you can realistically afford,” Kilday said. “The best rates usually go to people with good credit, low debt compared to their income, and steady jobs. Improving these basics often helps more than just searching for the right lender.”
Check your credit score and debt-to-income ratio
Strong credit still unlocks the best rates. “To unlock the most savings, prequalify online to view multiple offers without impacting your credit score,” Jeremy Panizzoli, founder at FinQnA.com, a personal finance advisory company, told NTD.
Like Kilday, Panizzoli advises comparing loan interests across multiple lenders. “Make sure to read the fine print, and pick a repayment term that balances monthly affordability with lower total interest,” Panizzoli said.
Keep your expectations reasonable
The main risk of a personal loan is overborrowing, even when rates are low. “Borrowers are often tempted to take larger loans than they need, which increases their long-term financial obligations,” Panizzoli noted. “Another risk is assuming a low rate will last indefinitely; refinancing or variable-rate loans can change unexpectedly, so again, be sure to read the fine print.”
To get the best possible personal loan, treat it like a contract negotiation
“Demand a full amortization schedule from your borrower, Alex Jones, founder of Fund Forge, an AI-powered financial technology payments company,” told NTD. “Also, verify whether the interest rate is fixed, and make sure to run the payment through your real monthly cash flow and not your hopeful cash flow.”
Jones said he’s seen borrowers say they can “afford” a payment on paper, then miss it the first month because they didn’t account for timing. “You have to account for rent, payroll, taxes, and living costs, all hit before the loan due date,” he advises.
Always Assess the Risks in a Personal Loan
The biggest personal loan issues and risks, Kilday sees, aren't the loan itself, but how the borrower uses it.
“High interest rates for fair or poor credit, origination fees, and stretching out payments can all lead to paying much more in interest,” Kilday said. “Debt consolidation can also backfire if you start using your credit cards again after taking out the loan.”
One of the biggest mistakes people make with personal loans is focusing only on the monthly payment and ignoring the total interest and fees. Another is choosing a loan for the wrong reasons and then failing to repay it on time.
“Consolidating debt without fixing the underlying spending problem, such as not having a budget or setting card limits,” she said. “Taking out loans for things that lose value quickly, like vacations or lifestyle purchases, instead of using them for important one-time needs, is a big mistake."
Panizzoli agreed, adding that it’s advisable to treat a personal loan as a one-time solution to a specific financial need, such as consolidating higher-interest debt, funding a long-term home improvement, or covering an unexpected emergency, with a clear repayment plan in place.
“Take a 'borrow with intention' framework,” he said. “Calculate exactly what you need, set a repayment timeline, and don’t let low rates tempt you into unnecessary debt.”
The views and opinions expressed are those of the interviewees. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. NTD does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. NTD holds no liability for the accuracy or timeliness of the information provided.